Author: Mad Meier

Business models need to evolve and change to meet new demand. During certain phases changes are incremental but at times a step change is required. Missing such moment in time may well mean the end of the business or the company.

Many organizations have difficulties to see the need for a step change. It is easier to focus on daily problems and find reasons for increasing difficulties in being successful. To step back and trigger fundamental changes is hard, requires guts and in some ways against human nature. People fear to lose something now and rather defer (eg reasons to not do) the opportunities to win in the future. Big change feels risky, staying and repeating what was successful before seems safer.

The caterpillar in the picture above had a great life so far. But in order to move on it is required to change the form and learn new capabilities. This is not about becoming a bigger or faster caterpillar or to add a few cool extensions – it is about fundamentally changing the nature and form. It requires fundamental changes to the way success is measured. As a butterfly would for not score high on the caterpillar KPIs – the opposite is also true.

For banks, this means to leave the world of brick and mortar ages and the management structures introduced by Taylor. New banking business models need to take advantage of the internet, create banking products which are digital in their core and embedded into the network. This does not automatically mean that everything becomes self-service – it means that humans involved need to add value and apply their authorised special abilities like creativity or empathy. It is the machines which follow predefined instructions and learns from patterns – humans complement this by finding creative solutions to problems based on empathy and emotions.

You’ve probably heard it a million times, but there is some wisdom in being careful what you wish for. While we may be striving to attain superintelligence, how can we ensure that the technology doesn’t misunderstand its purpose and cause unspeakable devastation?

The key to this problem lies in programing the motivation for SI to accomplish its various human-given goals. Say we designed an SI to make paper clips; it seems benign, but what’s to prevent the machine from taking its task to an extreme and sucking up all the world’s resources to manufacture a mountain of office supplies?

This is tricky, because while AI is only motivated to achieve the goal for which it has been programmed, an SI would likely go beyond its programmed objectives in ways that our inferior minds couldn’t predict.

But there are solutions to this problem. For instance, superintelligence, whether it be AI or…

How many movies, cartoons and sci-fi series have you seen featuring some kind of superintelligent robotic race? Probably quite a few. In some films, such as Terminator, they come to conquer the world; in others, they help us out; and in some, like Wall-E, they’re simply adorable. Of course, these robots are fictional, but will they always be? Will the future bring superintelligent AI? If it does, what will they look like and when will they appear?

In Superintelligence: Paths, Dangers, Strategies by Nick Bostrom, we learn about the journey toward AI so far – where we might be going; the moral issues and safety concerns we need to address; and the best ways to reach the goal of creating a machine that’ll outsmart all others.

What fundamentally sets us apart from the beasts of the field? Well, the main difference between human beings and animals is our capacity for abstract…

Launching a new business is similar to solving a jigsaw puzzle. The entrepreneur must have an idea of the complete picture and vision of what he wants to achieve. At first pieces or details of the puzzle may not be known but once the team manages to add most of them then there is a good chance that other people will jump in to fill the remaining pieces. The clearer the vision the higher chance to complete the puzzle as it clearly identifies what are the missing pieces required from someone(s) in order to fit into the whole. People, in general, are very open to help and demonstrate their skills and knowledge. Therefore don’t focus on pieces where you don’t have the expertise – use your energy to complete everything you can and engage with others.

What’s the foundation of banking and how is it affected by digital transformation?

A bank in the past provided physical safekeeping services. As it was hard to keep money safe at home there was a case to build a fortified building with specially protected safe to keep valuable assets. The fortified building, aka bank, could now take deposits and keep books to understand the ownership of the deposited assets. One element of trust came from the people and the other is bookkeeping and from the quality of the building and safe. At the time it was no doubt that an impressive building was a good selling point.

Today banking happens in the cyberspace. The quality of the accounting is still a key aspect. On top risk management becomes much more important mainly due to the way banks create new money. Cybersecurity has replaced the physical security of buildings. All these factors are facilitated by technology which becomes the dominant factor for success and failure. People are still important but today’s banking is no longer computer-assisted – it is human-assisted.

People start to realize that the digital transformation is progressing fast and affects their daily life. It is great to have a talk with an adviser but the people factor has become much more an empathy interface or the voice of a set of algorithms running in the background. If the underlying system is outdated or the user interfaces are bad, then this is results in a poor experience for the client.

In the digital era many of the physical trust factors like buildings and people loose relevance. A big and expensive building no longer suggest trust but rather the bank is wasting client’s money or seen as being high cost. In the past, people had a look into the safe room to gain confidence but now they may soon want to understand how technology is set up and ensures the safety and management of the deposited assets.

Many banks have very nice buildings with a technology landscape full of legacy. The tech giants and many of the neo banks are in a much better position to gain trust in this new norm. They are ahead of the digital transformation curve and ready to take over more and more business from companies which have not yet understood the new normal.

While apps and web pages have replaced the buildings, transparency and openness have become the new currency of trust.

Recently I had a discussion about agility which I found quite thought-provoking.

Let’s assume an organization wants to become more agile. Following the principle ‘If You Can’t Measure It, You Can’t Manage It’ the management asks to define those KPIs which measure the organizational agility.

Let’s start by thinking about the purpose of being agile. An agile organization adapts its actions and decisions whenever required based on the experiences made, available resources, skills and changes in the environment. It desires to move, react and adapt quickly.

We are uncovering better ways of developing software by doing it and helping others do it.

Through this work we have come to value:

Individuals and interactions over processes and tools

Working software over comprehensive documentation

Customer collaboration over contract negotiation

Responding to change over following a plan

What should or could be measured? Maybe this is the wrong approach, therefore, let’s explore what happens if a KPI is defined and declared as important in an organization? The organization starts to optimize the KPI value and KPI polishing often becomes the main mission and purpose instead of value creation for clients.

Maybe it is time to look at this from a different perspective. Think about a windmill and KPI’s which could be used to optimize its efficiency. The key factor at the end is the wind – the windmill can be optimized to the max but it will never produce more wind. A team, produced by the organization, is like a windmill exposed to the wind.

So rather than measuring the windmill, it is more sensible to measure those factors which create an environment which powers an agile team. Those factors are mainly cultural ones. The culture of a company is the long-term memory of the organization. Culture reflects the companies lived values, its actions and not by marketing slogans. If the organization’s culture reflects slow processes, inflexible planning, hierarchical and slow decisions then this enables very limited chance for an agile culture to emerge. Such organisations can only celebrate agile practices but will never execute in processes.

Here are a few questions about aspects which can be used to assess the organization and the environment:

How many people outside the team need to be involved to make a decision?

How many pizzas are required to feed the team?

Can the teams deliver independently?

Does the team control the resources to reach the desired outcome?

Is the team empowered to make decisions?

How skilled are the team members?

Can the team decide on its members?

Are all the skills from all disciplines part of the team?

Is failure considered a learning experience and a key step in a career?

Do all team members share the same vision and objectives?

How many people involved do not contribute to the outcome?

Does the team have direct access to the clients?

Does the team get direct client feedback?

Can the team decide on timeline and deliverable?

Can the team engage openly with internal and external experts?

Depending on the answers to the questions it makes more sense to transform the organization than to measure the teams. Remove outdated top-down structures, decentralize decision power and seek high skilled staff. Be aware that many parts of an organization have no interest in the transformation. They typically form the immune system of the former structure and will try to keep things like they always were. Some even dream to turn the clock back to the good old times.

As part of the transformation, many things are turned inside out. The primary purpose of the management in an agile world is to enable the teams, break down barriers and minimize friction through the organization.

This process takes longer than the time horizon considered by typical managers today. As today’s problems are much more urgent and need to be solved immediately, there is no time to transform … but enough time to define some KPI’s, perform measurements and produce slides.

In the current transition, humans get amplified in many ways. This leads to many opportunities but also challenges as many simple and routine tasks and activities will become automated.

Complex activities will be exposed to automation as machines excel in processing the vast amount of available data. Machines are also entering the realm of white-collar workers like lawyers, managers and various professional service industries.

Areas where empathy counts or creativity matters will remain human-dominated but become increasingly machine assisted.

The digital transformation will likely be a much bigger challenge than the previous step changes in history. Reason due to the higher speed (within a life of a person) of change while prior changes happened over generations in the past.

In the past access to information was difficult – educated people typically accumulated a lot of knowledge and information. Today the access is rather easy, information is evolving rapidly and key skills have become to know how to use and combine various information sources and to gather and apply the collective knowledge. There are also creative elements and intuitions which become very important.

These changes are big challenges for countries that use to evolve slowly or try to preserve the past. All those who created big and complex structures will have increasing problems to keep pace. Companies with distributed and flexible structures outperform centralized ones.

If a country decides to move slowly, it can but others will not wait and continue to evolve. A chasm is opening between the ones who move with the time and others which become digital developing countries.

But also within a country, many things have to change such as education. The focus must move away from extrinsic to intrinsic motivation. Doing things well and being creative becomes more important than trying to be the same as all others. Education needs to amplify skills and passions rather than pressing all into one common scheme.

While the past may have been great it is only the future which matters as today’s future is tomorrows reality.